Archive for October 12th, 2011

One of Rupert Murdoch’s most senior European executives has resigned following Guardian inquiries about a circulation scam at News Corporation’s flagship newspaper, the Wall Street Journal.

The Guardian found evidence that the Journal had been channelling money through European companies in order to secretly buy thousands of copies of its own paper at a knock-down rate, misleading readers and advertisers about the Journal’s true circulation.

The bizarre scheme included a formal, written contract in which the Journal persuaded one company to co-operate by agreeing to publish articles that promoted its activities, a move which led some staff to accuse the paper’s management of violating journalistic ethics and jeopardising its treasured reputation for editorial quality.

Internal emails and documents suggest the scam was promoted by Andrew Langhoff, the European managing director of the Journal’s parent company, Dow Jones and Co, which was bought by Rupert Murdoch’s News Corporation in July 2007. Langhoff resigned on Tuesday.

The highly controversial activities were organised in London and focused on the Journal’s European edition, which circulates in the EU, Russia, and Africa. Senior executives in New York, including Murdoch’s right-hand man, Les Hinton, were alerted to the problems last year by an internal whistleblower and apparently chose to take no action. The whistleblower was then made redundant.

Murdoch’s Daily Telegraph, the best-selling daily newspaper in Australia’s largest city of Sydney, is “running a campaign on regime change,” according to Communications Minister Stephen Conroy. Gillard herself demanded and got a retraction and apology from the Australian, another daily owned by the billionaire’s News Corp. (NWSA), after it printed a falsehood. She said the Daily Telegraph should enter another report “for one of our fiction prizes.”

“It’s not surprising at all that Murdoch is at it again in Australia while the U.K. phone-hacking scandal is still fresh,” said Tim Bale, a professor of politics at the University of Sussex and the author of “The Conservative Party: From Thatcher to Cameron.” “He tries to use his economic power to get political influence. It’s part of his business model.” …
Gillard’s approval rating plunged to 23 percent, down 6 percentage points in two weeks, in a survey by Australia’s Newspoll organization published Sept. 6 in the Australian. That was the lowest for a prime minister since 22 percent for Paul Keating in 1993.

That’s right: Everyone’s favorite neoconservative neoliberal and hater of FDR and LBJ, the guy who bought what once rivaled The Nation in terms of helping to shape the American liberal mindset and turned it into a slightly spiffier version of The National Review, the guy who actual liberals (as opposed to the straw ones Peretz’ fellow traveler Howard Kurtz has discussed over the years) have laughed at, if not ignored, for over three decades, has come out against Occupy Wall Street.

Solidarity hero Lech Walesa is flying to New York to show his support for the Occupy Wall Street protesters.

“How could I not respond,” Walesa told a Polish newspaper Wednesday. “The thousands of people gathered near Wall Street are worried about the fate of their future, the fate of their country. This is something I understand.”

A former shipyard worker who led Poland’s successful revolt against Soviet communism, Walesa said “capitalism is in crisis” and not just in America.

“This is a worldwide problem,” he told the Lublin-based Dziennik Wschodni newspaper. “The Wall Street protesters have focused a magnifying glass on the problem.”

Oh, dear. Just another “professional protester”, as Dana Milbank and Marty Peretz would no doubt call him. (Y’know, just like Joseph Stiglitz, that other professional protester and Nobel Prize winner who’s endorsed Occupy Wall Street?) But then again, that epithet does have a touch of truth in it. He did parlay his protesting into not only freedom for Poland, but the presidency of Poland – if that’s not opportunistic self-promoting professional protesting, I dunno what is!

If I have to choose between the hot-tempered bigoted ass who used his wife’s money to ruin The New Republic and the guy who freed Poland and won the Nobel Peace Prize, I won’t be siding with the ass, that’s for sure.

The Republicans in the Michigan legislature have decided that the state government is too independent, and so they need to revive the spoils system.

A proposed state constitutional amendment would expand the number of political appointees the governor can appoint from about 100 to 450. Replacing career bureaucrats with political appointees would do pretty much the same thing to the government bureaucracy that term limits have done to the legislature: make job experience and competence less important than partisan connections.

A Republican legislator has also introduced a bill to undermine the Civil Service Commission’s independence from the politicians in the legislature.

The Republicans’ new motto: “Assimilate or eliminate.”

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Not all that long ago, I posted a chart that showed that the market might be breaking out to the downside. Here’s a chart that says it might be breaking out to the upside. A melt-up could take it 10% higher to about 1350 based on Fibonacci levels (which, of course, have no rational basis).

Basically, this situation is described as range-bound trading. Investors are waiting for some fundamental change to jump in or jump out of the market. Bits of news like disappointing earnings from a major aluminum producer are evidence on the side of economic slowdown. A fascinating bit of evidence on Calculated Risk that lower interest rates are bringing out home buyers could be evidence that the economy is starting to turn positive. But until either scenario is confirmed, few will want to commit. Hence the trading range.

I have drawn it as a “flag,” but that’s arbitrary. The idea of a flag is that, while prices are in a range, one end of the range is either rising or falling, while the other is flat. That suggests a breakout, probably in the direction of the trend (I do not discern a trend). Volume is another important indicator. When it’s high, lots of people have made decisions and probably won’t want to reverse them quickly. At the moment, volume is roughly average. Volatility is falling, as it generally does when prices are rising but, at 30, it’s still well above typical values (ca. 20).

Basically, traders are feeling a little less freaked out by Europe. Slovakia vetoed the current bailout plan, but everyone figures that Merkel and Sarkozy will eventually overcome opposition, if only when the markets go into their next freakout mode and the obstructionists in the EU starts to see that they are on the chopping block, too.

But, remember, Europe is just the warmup game for whatever idiocy the Republicans have planned around the next debt ceiling limit vote. It will be a very nervous autumn.

For my part, I believe we are near (1-3 years from) the darkest moment, but not yet there. And so a little bit of optimism is seeping into my bones.
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Added: bumped down to lift MEC’s more important post.
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Added: This article by Max Abelson of Bloomberg (via Ritholtz) explains why I feel just the faintest bit of optimism, especially this excerpt…

“I don’t think it’s a time to make money — this is a time to rig for survival,” said Charles Stevenson, 64, president of hedge fund Navigator Group Inc. and head of the co-op board at 740 Park Ave. The building, home to Blackstone Group LP Chairman Stephen Schwarzman and CIT Group Inc. Chief Executive Officer John Thain, was among those picketed by protesters yesterday. “The future is not going to be like a past we knew,” he said. “There’s no exit from this morass.”

If the people who are causing the problem recognize that there is a problem, the solution is not impossibly far away. Of course, not all is this promising, such as this further excerpt:

[Wilbur]Ross, 73, the billionaire chairman of New York-based WL Ross & Co., said Wall Street’s “inherent ingenuity” shouldn’t be discounted and that “the history of the investment community shows that it will find ways to profiteer.”